$1.7b Fund to Help Expand Transport Network in Iran

EghtesadOnline: The government is mulling a national transportation development fund with an initial investment of 200 trillion rials ($1.75 billion), the Roads Minister Mohammad Eslami said.

News ID: ۷۴۶۳۱۴

09 December 2018

During a visit to the city of Incheh Borun in northeastern Golestan Province on Friday, Eslami said, “The development fund will contribute to the expansion of transport infrastructure,” IRNA reported.

The fund will be responsible for spending and the expansion plans. Eslami said the statute and strategy of the fund “have been ratified by the government.”

A mechanism has also been devised that enables private companies to collaborate with the fund and contribute to transport infrastructure development, according to Financial Tribune.

The Majlis approved a bill for establishing the special fund in July 2016 to provide funding for transport expansion and attracting investments.

Assisting the payment of government bills for maintenance of transportation infrastructure, payment of the subsidized loans for road renovation projects, providing letters of guarantee to investment firms, issuing credits and bonds specifically to help finance transport projects are some of the responsibilities of the fund as outlined by parliament.

Furthermore, the bill says that the fund will be governed by a board of trustees comprising the roads minister, economy minister and the head of the Management and Planning Organization.

Self-Sustaining Development

While independent observers have welcomed the prospect of establishing the fund, many note that the initiative should not marginalize the private sector by increasing the state’s share in national development plans.

Industry observers have often called for a bigger share of self-sustaining public transportation compared with the overtly and poorly managed state-run public transport.

According to the Ministry of Roads statistics, toll freeways account for 2,000 kilometers out of the total 200,000 kilometers of roadways. The ministry has announced its intention to raise the share of road toll by 20% over ten years.

The problem is not limited to roadways as railroads too are mostly built and managed by state-owned companies. However, in recent years as the government embarks on downsizing a few non-government trains have been operating on specific routes, especially to the holy city of Mashhad in the northeast that is visited by millions of pilgrims around the year.

In Italy, the ratio of unsubsidized rail transportation to subsidized transportation is 75% to 25%. Experts are of the opinion that in the long run, there is no way but to improve self-sustaining public transportation.

Incheh Borun Infrastructure

During his visit to Incheh Borun, the minister addressed the anxiety of the local people over the expansion of transportation infrastructure. “The ongoing projects in the area, including the expansion of the Incheh Borun railroad and dry port are to get facilitated.”

A dry port is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a center for transshipment of sea cargo to inland destinations.

By mid-November, some 21,500 tons of non-oil goods were exported via rail through Incheh Borun border terminal in the northeastern Golestan Province since the beginning of the current fiscal in March. The volume was 81% higher compared to the same period last year, a local railroad official said.

"About 49,000 tons of goods were imported via Incheh Borun checkpoint by railroad, showing a 221% surge year-on-year," Mohammad Reza Qorbani said.

The export-import were to and from Kazakhstan, Turkmenistan, China, Kyrgyzstan, Uzbekistan and Russia, the news portal of the Ministry of Roads reported.

According to the minister, expanding the Incheh Borun transportation infrastructure can and should contribute to the development of the transport network in the northeastern regions. He urged the private sector to do their fair share in the key road industry.

Eslami pointed to a plan to electrify the 430km Garmsar-Sari-Gorgan-Incheh Borun Railroad, saying the project is on track.

In April the deputy head of the Islamic Republic of Iran Railways for planning and investment, Nourollah Beiranvand said, “The project is awaiting the letter of credit worth $1.2 billion from Russia.” The project was officially launched in July.

The contract for the project was signed between Iran and Russia in 2015. The agreement calls for electric locomotives to be manufactured in Iran and in cooperation with domestic firms. According to officials, implementation of the project will increase the route’s transit capacity to 8 million tons a year.

Road Safety

Eslami further said that road safety enhancement is on the ministry agenda. There are 3,300 accident black-spots in the country that account for the majority of road mishaps.  “Rehabilitating the roads and making the dangerous areas safe now have priority.”

Some 20 of the accident-prone areas are in the hot tourist province of Golestan, where the minister was visiting. He said, “Work on securing the 20 areas has started.”

According to the Iran Legal Medicine Organization, during the first six months of the current fiscal that started in March, 8,841 people were killed in road accidents, a 1.7% year-on-year increase.

Substandard vehicles lacking global standards and the low quality of roads plus reckless driving habits have been  the main culprits behind the high road mortality rates.

Earlier in June, and in an effort to help reduce motor vehicle fatalities, a smartphone application was introduced that notifies drivers of imminent danger when drawing close to an accident-prone area. The application will also provide drivers with a hazard map.

The app named Hampa has been developed jointly by the Ministry of Roads and the judiciary’s Crime Prevention Bureau. The bureau director, Alireza Savari, told YJC at the time, “The accident-prone area identification app is available and drivers can install it on their phones to get notifications about the danger zones.”

The application is available for download on local Android market Cafe Bazaar. It alerts drivers 800 meters before reaching the given destination.